How to Start a Dental Practice
As a dentist, you may be considering starting your own practice. Whether you intend to open a dental practice on your own or with a partner, there is a lot to consider before opening the surgery doors to clients.
Do you intend to open an NHS service, a private practice or a facility that provides both? And how do you intend to fund your venture? Keep reading to discover what you need to know to answer all of your questions about starting a dental practice.
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Running your own practice can be both profitable and satisfying, but there are also significant risks associated with starting a dental business, especially in the current economic climate. While the UK ‘high street’ dental market is worth over £7bn, the market as a whole has experienced difficulties in the wake of the Coronavirus pandemic.
According to research by the GDC (General Dental Council), 65% of dentists expect income to fall over the next year, while professionals report a general decline in income as a whole. So, in order for your business to be a success, you need to keep these figures in mind and make smart decisions to help navigate the turbulent times.
One of the best ways to make the most of your dental practice purchase is by securing the most favourable finance terms, reducing your capital investment and keeping rates as low as possible. By doing so, you’ll be able to generate more profit and have less uncertainty around repayment. In order to secure these terms, our finance broker team can help you navigate the process and maximise the value of your application.
Arguably the most important consideration for entrepreneurial dentists is the business plan. Without a comprehensive business plan covering finance, strategy and future plans, you risk losing access to the best finance options available to you. To put it simply, a strong business plan could be the difference between success and failure for your venture.
So, keep reading to dive deeper into what you need to know before starting a dental practice, including writing your business plan, the legal consideration and securing the necessary dental finance to kick-start your business.
Starting a dental partnership or going solo?
One of the first decisions you will make when starting your own dental practice is whether you intend to go it alone or with a partner. If the answer is the former then you need to consider how you will balance running a dental business alongside being the principal dentist, if that’s what you intend to do. In addition, as an individual business owner, you will need to make cover plans if you are unable to work due to sickness or holiday.
For these reasons, many dentists choose to work together and form a dental partnership. Legally, a dental partnership must be made up of two or more qualified dental professionals, defined by the GDC as “a person qualified to a certain aspect of dental care that is registered with the GDC to work in the UK.” To clarify, that’s not just dentists but also dental nurses, dental technicians, dental therapists, dental hygienists, orthodontic therapists and clinical dental technicians.
So, if you intend to start a dental partnership with a non-dental professional, like your spouse or a practice manager, then you may be breaking the law and be subject to criminal charges. As a result, a dental partnership must be formed between two or more dental professionals.
However, if you choose to start an LTD company rather than a partnership, you can have shareholders who are not dental professionals, but only if the majority share (>50%) is owned by dental professionals like yourself.
The only other instance in which you can negate this restriction is if you choose to open an NHS dental practice under a General Dental Services (GDS) contract, then non-dental professionals can enter a partnership with a dental professional under the National Health Service Act 2006. However, this applies only to NHS dental practices, and there are some other restricting factors you will need to keep in mind.
To find out whether your partnership qualifies for this exception, we recommend contacting the GDS direct and appointing a specialist dental lawyer.
Remember, if you choose to start a dental partnership then lenders will look closely at both of your financial circumstances, including any past investments or business ventures. On one hand, working with a partner may make you a lower risk in the eyes of lenders, especially if your partner has a proven track record running successful dental practices. However, if either of you have credit issues or have been in debt in the past, then you may find this impacts the finance you can access as a business entity, even if it was a long time ago.
Opening a dental practice alone
Like working with a partner, there are some significant benefits to going solo - but you must take a few things into account.
Perhaps most obviously, if you choose to open a dental practice alone, then you will have complete control over the business strategy from the outset. For example, if you have a timeframe in mind for retirement or you plan to sell in the future, you won’t have to rely on your partner to approve any changes to the structure of the business. In addition, you won’t be affected by anyone else’s financial background, which could be a risk as we mentioned above.
Typically, a dental practice opening by just one dental professional is a squat practice - a single surgery practice with one principal dentist. However, you may also consider appointing associate dentists, who are different from partners as they are your employees and typically don’t have a share in the business.
So, if you intend to open your own dental practice without a partner, or your partner is a dental nurse or hygienist, rather than another dentist, then keep reading to learn about starting a squat dental practice.
Starting a squat practice
As mentioned above, a squat dental practice is a single surgery practice. This is typically the first step for many dentists who are starting their own venture, rather than acquiring an existing practice.
Even though a squat dental practice is often small, it still takes significant investment and experience to establish a brand new operation. From choosing the right location to recruiting a team and acquiring the necessary dental equipment, you will need the right finance broker on your side to secure the best funding for your squat practice.
In addition, there are significant compliance considerations when starting any practice, even a squat. You must register under the CQC (Care Quality Commission) as a new provider and registered practice manager. Going forward, you must follow CQC policies and guidelines, covering everything from the day-to-day running of your operations through to strategy, recruitment and training.
Registration as a new practice can be a costly process, so it’s important to take the time to put together a thorough business plan that covers your location, recruitment plan, equipment requirements and all other aspects of your business strategy.
Choosing a location
So, whether you are starting a squat practice or going into business with a partner on a larger venture, then you will need to carefully consider where you intend to locate your business.
The right location could be the difference between success and failure for your practice. Therefore, this is no time for assumptions or emotive decisions, instead, you need to carry out detailed research into the locations you are considering.
Firstly, identify locations with growing residential communities, like high streets near new-build estates, for example. If you are looking at an established town or village then research any existing practices in the area; is there capacity for another practice within a certain geographic area?
Once you have found the postcode, it’s time to assess the property available for your budget. Be aware of misleading footfall statistics. For example, a railway station might have significant footfall but lacks the necessary parking or residential network required for a dental practice. Equally, you might find that commercial property in out-of-town business parks present as an appealing and affordable option. However, in the current climate where many employees still work from home either all or part of the time, you might be better off choosing a spot nearer to where people live, rather than where they work.
In addition, ask questions about parking and public transport. If your clients find it difficult to access the practice, then they will simply go elsewhere. There may be scope to expand parking facilities if you’re purchasing a parcel of land with the practice, but that will need to be accounted for when budgeting for your finance application.
And finally, you might be choosing between investing in a property that has already been a dental practice versus converting a general commercial space, such as a shop or office, into a practice. There are benefits to both, and the quality of the finance on offer to you may impact what you can afford.
Of course, the right finance can help you to secure the perfect practice location. So, be sure to work with Rangewell on your finance application to get the best possible deal for your business and to choose from lenders who know the dental market inside and out.
Financing a new dental practice
Let’s talk about getting finance to turn your dental practice concept into a reality.
Running a dental practice can be a highly profitable business, but with small profit margins and a high barrier to entry, there are significant risks. Lenders use risks, among other factors, to determine the finance you could qualify for, including amount, terms and repayment period.
Ahead of opening your business to customers, you will need to make a significant investment. As we already discussed, even the act of applying for CQC registration is a cost to consider. Furthermore, you may need to refurbish your property of choice to bring it up to standards.
Another significant investment to consider is your equipment. From x-rays to chairs, computers and other tools, you will know what is required to run a successful practice. There are various options available to you, including rental, purchasing new or purchasing second-hand equipment. Whichever you choose then you will also need to budget for repairs and maintenance. So, your finance application will heavily influence the equipment you can afford.
Since you are starting a new practice, rather than acquiring an existing business, only certain lenders will consider your application. As a result, it’s critical to work with a broker like Rangewell that has access to the whole of market, including a number of specialist lenders. We also have vast experience securing finance packages for businesses like yours, so we can help with the application process to ensure your proposition is as favourable to potential lenders as possible.
Types of dental loan
Now you understand the importance of finance for starting a dental practice, let’s take a closer look at the types of loans that may be available to you.
Secured and unsecured business loans
As a dentist looking to start your own practice, you are likely considering a dental business loan to help you kickstart the venture. As we’ve already discussed, starting a dental practice requires significant investment upfront, which can be difficult when you are unable to do your job and make money in the initial stages.
Depending on your circumstances, such as whether you are working with a partner or solo, and if you have a proven track record running similar practices, there will be different finance options available to you.
A secured loan is typically a long term finance product that is tied to the security of your business assets, most commonly property. Meanwhile, an unsecured loan is more flexible and can be useful if you don’t have fixed assets for a secured loan. There are different terms and loan periods available for both, and it all depends on your individual circumstances as well as the quality of your application.
To start your finance application today, reach out to Rangewell and we will support you throughout the entire process, from helping you do your research through to assembling the application, identifying any risks and securing the best funding package to suit your financial situation and for your new dental practice.
While both secured and unsecured business loans can cover a wide variety of costs within your business, there is also specialist finance available to help you buy the assets you need to run your practice. For dentists, asset finance can be a great way to fund the purchase of equipment. When starting the practice, even if it is a small squat practice, you will need x-ray machines, dental chairs, computers among other instruments and tools before you can open your doors to clients.
With asset finance, you can get the kit you need and repay as your practice starts to earn money.
Merchant Cash Advance
There are several other types of finance that you may qualify for. Merchant Cash Advance, for example, could give you an unsecured finance injection. You will then repay via monthly payments as a percentage of your transactional sales taken via your debit and credit card machine.
To find out whether you qualify for Merchant Cash Advance, or any other finance products to help get your practice off the ground, then get in touch with Rangewell today.
Starting a new practice requires significant frontload investment, and the finance you can secure will make a significant impact on what you are able to achieve as a new practice. Financial applications for dental practices require lots of upfront planning to make them as successful as possible, from identifying which practices suit your budget and will be appealing to lenders through to more complicated stages such as assembling the right business plan that will encourage lenders to consider your application as a favourable investment. Rangewell will help you through each step - we even have a selling agent team who can source suitable dental practices up for sale that suits your budget to make the research stage more streamlined.
So, when it comes to buying your dental practice, don’t take the risk. Work with Rangewell to ensure you get the best possible deal, including total loan amount, favourable repayment terms and suitable loan period. From supporting your application to sourcing deals and helping with refinancing, we do it all. Contact our team to get started today.